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Monetary Operations under an Interest Rate Corridor (IRC) Framework

Term Deposit Facility (TDF)

The TDF is a key liquidity absorption facility, commonly used by CBs for liquidity management. Due to the BSP’s inability to issue its own debt instruments, the TDF will be tasked to withdraw a large part of the structural liquidity from the financial system to bring market rates closer to the BSP policy rate.

The BSP will initially offer two tenors—seven days and 28 days—in its term deposit auction. The possibility of offering longer tenors will be evaluated going forward, depending on the liquidity needs and preferences of the market.

The TDF will be operated using a variable-rate, multiple-price tender (English auction).